Russian metals major Nornickel selling stake in Nkomati JV in South Africa to African Rainbow Minerals

Russian metals major Nornickel selling stake in Nkomati JV in South Africa to African Rainbow Minerals
/ African Rainbow Minerals
By bne IntelliNews November 24, 2023

Norilsk Nickel (Nornickel), a Russian nickel and palladium mining and smelting company, has entered into an agreement to transfer its 50% stake in the Nkomati Joint Venture in South Africa to African Rainbow Minerals (ARM), the company said in a statement.

Nornickel will pay $18mn to pass its 50% stake in the Nkomati nickel mine to ARM, the Johannessburg-listed company said on Friday (November 24). ARM will buy the stake for ZAR1mn ($54,440) but will also take over the environmental liabilities of the Nkomati mine, along with the share of Nornickel's subsidiary, with a ZAR325mn ($18mn) contribution from the subsidiary.

The Nkomati mine was part of the Russian giant's $6.5bn purchase of LionOre Mining with assets in Africa and Australia in 2007 after outbidding Xstrata and was the largest foreign acquisition by a Russian company at that time, according to Reuters.

Nkomati, situated in northeastern Mpumalanga Province of South Africa, is an open pit 16,000 tonne per year operation that is nearing end of its life. Nornickel has entered into the definitive agreement over the stake sale through its South African subsidiary, Norilsk Nickel Africa Proprietary Limited (NNAf).

The transaction is expected to close during 2024 subject to the approval of South African regulatory and competition authorities and completion of certain other conditions as agreed between NNAf and ARM, a diversified mining company.

"According to the terms of the signed purchase and sale agreement, ARM will take over the environmental liabilities of Nkomati mine, together with NNAf’s proportionate share of the obligations and liabilities relating to the Nkomati mine’s assets," Nornickel said.

Nornickel said the agreement underscores its strategic commitment to developing its unique resource base and Tier-1 assets portfolio in Russia as well as its long-term strategy to exit non-Tier-1 assets.

Nkomati’s assets include a deposit of disseminated copper-nickel sulphide ores, a dormant mine, and an open pit. Production was terminated there in March 2021.

ARM chief executive Mike Schmidt said on September 1 that although nickel prices hit record highs earlier this year, they are unlikely to be sustained for a long enough time to support the viability of Nkomati.

Nornickel, a diversified mining and metallurgical company, is the world’s largest producer of palladium and high-grade nickel and a major producer of platinum and copper.

It also produces cobalt, rhodium, silver, gold, iridium, ruthenium, selenium, tellurium, sulphur, and other products, with production units in the Norilsk Industrial District, on the Kola Peninsula and the Trans-Baikal Territory in Russia, as well as in Finland.

The Norilsk Nickel board in early November approved an interim dividend of RUB915 per share or a total payout of up to RUB140bn ($1.5bn) for 9M23.

As followed by bne IntelliNews in detail, in September 2022 Oleg Deripaska of United Company Rusal and the CEO and main shareholder of Norilsk, Vladimir Potanin, contemplated a merger between Norilsk Nickel and Rusal that could have ended the longest conflict in Russian corporate history.